Infrastructure major Nagarjuna Construction Company (NCC) expects financial closure for its proposed 1,320 mw thermal power plant in the backward district of Srikakulam in Andhra Pradesh by March-end. The project involves a capital outlay of Rs 6,955 crore, of which about Rs 5,000 crore would be funded through debt.
“We will achieve financial closure for the project by March 2010. The government has allotted us about 1,000 acres for setting up of the project. We have already secured coal linkage from Mahanadi fields. We are expecting environment clearance any time,” NCC’s executive vice-president (finance) Y D Murthy told DNA Money.
This would be the company’s first thermal power plant. It has two hydel projects at advanced stages of execution in Himachal Pradesh and Sikkim. While the 100 mw Himachal Sorang is being set up with a capital outlay of Rs 580 crore, the 280 mw Himalayan Green project has an outlay of Rs 1,960 crore.
NCC had earlier attempted to foray into power by investing in the gas-based Gautami power plant, now being operated by the GVK group. With inadequate availability of gas affecting the schedule, NCC had decided to go slow on the project before the GVK group took up the project. NCC has since sold its 9.5% stake in the project to GVK.
“We had agreed to sell our stake in Gautami to GVK for Rs 112 crore. GVK has already paid Rs 56 crore to us and the balance would be paid to us in December,” Murthy said.
Meanwhile, the company is exploring the possibility of raising funds by diluting the equity of its 100% subsidiary NCC Infra Holding. The subsidiary was set up in 2005 for investing in build-operate-transfer and build-own-operate-transfer projects, which would be executed by its parent company NCC.
“We have still not decided on equity dilution. Though tapping private equity or raising funds through an IPO are options available to us, there is also another option of the parent company infusing more funds into the subsidiary. But, the board is yet to take a decision on the mode of funding,” Murthy said.
According to him, NCC is in no hurry to raise funds at this point since it had raised Rs 370 crore through a QIP recently and the stake sale in Gautami has brought in Rs 112 crore. The company has about Rs 150 crore cash in its books.
NCC Infra Holdings takes care of all the three power projects, including the new thermal plant and five road projects that are at various stages of execution. The subsidiary has so far invested about Rs 400 crore in the form of equity in all these projects. The five road projects under it include two projects in Uttar Pradesh, two in Karnataka and one in Tamil Nadu.
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